The Affordable Connectivity Program is Ending—What Comes Next for the 23 Million People Who Could Lose Internet Access

BlogEconomic EquityFeaturedTech Equity

Daniella Espinoza April 30, 2024

In today's digital age, internet access is no longer a luxury-it's a necessity. From education and employment, to healthcare and social connections, the internet opens the door to vital opportunities that empower individuals and strengthen communities. Yet, not everyone has equal access to this essential resource. Communities of color, historically marginalized and excluded from wealth-building opportunities, face significant barriers to affordable and reliable internet access.

The Impact of Internet Access on Racial Equity

For many communities of color, limited access to the internet perpetuates systemic inequities and exacerbates the racial wealth gap. The digital divide restricts opportunities for education, job growth, and economic stability, preventing families from fully participating in the modern economy. By ensuring that everyone has access to affordable, high-quality internet, we can take a significant step toward leveling the playing field and promoting racial equity.

Two key ways to make the internet affordable is through promoting competition among providers to lower prices while also leveling the playing field for accessibility, like the Affordable Connectivity Program, for families with limited financial means. The ACP provides a $30/month benefit to connect families to the internet and is critical for 23 million low-income households. But with ACP set to end this month due to lack of funding from Congress, the connectivity and opportunities the program offered these households are at risk. Nearly half of ACP participants are from Latinx and Black households, highlighting the disproportionate threat the end of this program poses to communities of color.

A Sustainable Path Forward

In the near-term, Congress must pass stopgap funding for the ACP; in the long-term, we need a sustainable solution for internet affordability. Investing in universal internet access is pivotal to racial and economic equity. Access to the internet improves educational outcomes as well as employment rates. So how do we ensure that all Americans can continue to afford to access the Internet? One answer lies in modernizing the LifeLine program to better match the benefits offered by the ACP.

Merging the ACP into LifeLine and Increasing the Monthly Benefit

The LifeLine program is a complementary program similar to the ACP that helps low-income families pay for internet and phone service. Unlike the ACP, which is funded by a one-time appropriation in the Federal budget, LifeLine is funded more sustainably by collecting surcharges on telecommunications (i.e. cell phone/landline) services. Compared to the ACP, LifeLine provides a much smaller $9.25 benefit on internet plans and requires certain speed and data minimum standards for those plans to protect consumers and ratepayers who help contribute to the LifeLine fund from overpaying for substandard internet. Merging the best qualities from these two programs is key to ensuring families stay connected.

LifeLine's lower benefit means less profit for Internet Service Providers, so few offer LifeLine eligible home internet plans, limiting consumer choice and LifeLine's popularity in comparison to the ACP. This disparity shows, LifeLine has a participation rate of 6.6 million-less than one-third that of ACP. Increasing the LifeLine benefit to more closely match the ACP's, while retaining and improving LifeLine's minimum service standards and consumer protections, would attract more providers and increase consumer choice while also ensuring the LifeLine program is more effective in ensuring families can afford fast, high-quality internet plans needed for school and work. However, sustainably increasing the LifeLine benefit requires identifying the proper funding.

Broadband Providers Should Contribute to the LifeLine Program

Modernizing and improving LifeLine hinges on requiring broadband providers to pay their fair share towards the program. LifeLine's $9.25 benefit comes from the Universal Service Fund, which itself is funded by a 34.6% tax or surcharge on a "contribution base" of $33 billion a year in telecommunications revenue from phone companies. Phone companies pass this surcharge onto customers, representing approximately $2.00 of the taxes and fees customers see on monthly phone bills.

As LifeLine subsidizes both phone and internet plans, and both internet and phone companies have taken billions in grants from taxpayers to build their infrastructure, the USF contribution requirement should also include revenue from ISPs. This would increase the contribution base for LifeLine and other Universal Service Fund programs by over seven times to $250 billion. A much larger contribution base gives the Federal Communications Commission the flexibility to increase the current LifeLine benefit while minimizing the impact on monthly bills. Increasing the benefit incentivizes participation of more ISPs and improves the plans available to low-income families. Including broadband revenues in the USF also gives the FCC the flexibility to eliminate surcharges for eligible low-income families that choose not to participate in the LifeLine program or do not have LifeLine eligible internet plans at their residence.

Large Internet Companies Should Contribute to the LifeLine Program

Congress can act to further minimize the impact of a LifeLine modernization by giving the FCC authority to assess a small surcharge on the revenues of edge providers that benefit most from increased internet access. Adding large edge providers, such as Google, Meta, and Amazon, as contributors to the USF could increase its contribution base from $33 billion to as much as $2.3 trillion. Ensuring large internet companies play their part alongside telecommunications companies in closing the digital divide could enable a modernized LifeLine program to triple its benefit while lowering the impact on consumer phone bills to less than $0.70 a month.

In the UK, a digital services tax on online advertising, social media platforms, and digital marketplaces, is projected to raise approximately $3.7 billion in revenue by 2024-2025. Similarly, France introduced a GAFA (Google, Apple, Facebook, and Amazon) tax, anticipating annual revenues exceeding $560 million. These examples highlight the potential of a digital services tax to serve as a sustainable funding source for critical connectivity programs like LifeLine or the ACP.

Moving Forward to Digital Equity

Bridging the digital divide is no small task-and it will require collaboration between regulators and our government. The FCC must use its new powers to modernize the LifeLine program by ensuring broadband providers contribute to the Universal Service Fund. Extending that contribution to include large edge providers would require action from Congress. This is critically important for increasing access to wealth-building infrastructure like high-speed internet. Additionally, for families that struggle to get out of poverty, or face significant economic and financial obstacles due to their inability to afford Internet access, LifeLine modernization is critical as the ACP ends. Now is the time for Congress and the FCC to work with all stakeholders to come together to create a long-term strategy that ensures universal, affordable, and quality internet access for all Americans. The future of our economy and the well-being of millions of families depend on it.